Every year in October, the Social Security Administration announces the annual cost-of-living adjustment (COLA) for Social Security beneficiaries. The adjustment is designed to help Social Security and Supplemental Security Income beneficiaries battle the cost of inflation. Social Security and Supplemental Security Income recipients will see a rise in their monthly benefits as a result of the COLA increase. The COLA for 2023 is expected to be one of the largest increases in decades. Projections estimate the increase could be as high as 8.7%.
The increased benefit would take effect in January of 2023 for the roughly 66 million Social Security beneficiaries. Those receiving Supplemental Security Income will see their first adjusted benefit in December of 2022. The Social Security COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). COLA is calculated by using the average rate of inflation in the third quarter of the year. Last year, the COLA was 5.9%, which was the biggest adjustment since 1980.